by Joe Mandese @mp_joemandese, May 31, 2016
Marketo, a publicly traded marketing automation software provider, this morning announced an agreement to be acquired by private equity firm Vista Equity Partners in a cash deal valued at $1.79 billion.
The companies said Marketo shareholders will receive $35.25 in cash per share, “representing a 64% premium” relative to the May 9, 2016 closing price.
The value is slightly higher than the stock’s 12-month high of $33.90, but a substantial value over its 12-month low of $12.86.
There had been speculation that a sale was imminent.
In a statement, Marketo Chairman-CEO Phil Fernandez said the deal was in the best interest of the company and its shareholders and that it will enable Marketo to continue operating as an independent company.
But in the deal announced Tuesday, the company will be taken private by Vista for $35.25 in cash per share, representing a 64% premium to the unaffected closing price as of May 9. The deal is expected to close in the third quarter of 2016. “The acquisition will allow Marketo to continue to focus on customer success and to remain the independent category leader, continuing to set the agenda for product innovation and thought leadership for the entire digital marketing industry”, Phil Fernandez, Marketo’s chairman and CEO, said in a statement. Marketo, founded by Fernandez and Jon Miller in 2006, offers a suite of cloud-based marketing services running the gamut from customer acquisition (lead management, email marketing) through to consumer, segmented, and mobile marketing. On Tuesday, the stock traded 8.98 percent higher. So, in addition to the talent loss that Marketo would have naturally experienced following its 2013 initial public offering (IPO), there will likely be “a little bit of an exodus” following this latest news, he predicted. Visa Equity is a private equity firm focused on investments in software, data and technology-enabled businesses. They often tend to reduce expenditures on sales and marketing as well, as a way of cutting costs. Customers may also be concerned about a potential lack of innovation, Wang explained, given Vista’s reputation and given the way these deals tend to go. “Pretty soon it’s just about keeping a maintenance stream of customers and not really growing the market”, he explained. Cindy Zhou, vice president and principal analyst at Constellation Research, doesn’t seem to think it’s all negative. For Vista Equity, the acquisition comes one month after it bought event management software company Cvent for $1.65 billion. Vista Equity Partners couldn’t immediately be reached for comment.
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